UK building-finance firm targets €150m bond sale for 1,000 homes
UK finance firm Value Asset Management (VAM) is planning to raise as much as €150m via bonds listed on the Nasdaq First North Exchange in Copenhagen to fund the construction of as many as 1,000 homes around Dublin.
It may also look at an equity stock market-listing later this year, its CEO has told the Irish Independent.
VAM will also pursue acquisitions of developers, probably targeting firms that have a valuation of more than €20m and which typically employ more than 100 people.
Previously known as Victoria Asset Management, VAM announced its intention last year to raise an initial €50m via a bond listing in Denmark.
At that stage, it was intended that the funds would be used exclusively to fund developments by Dublin-based homebuilder Victoria Homes.
Trading in the €50m bond begins in Copenhagen on Thursday.
But VAM CEO Peter Mulligan said that the firm will now act as a finance partner to any potential developer and other partners.
In bond documents published yesterday, VAM noted that just €200,000 of the initial €50m bond has been sold. The bonds mature in 2023 and attract a 6.5pc interest rate.
Mr Mulligan said that while there has been strong interest from institutional investors, they are primarily aimed at backers such as high net-worth individuals and family offices.
He said that many smaller potential investors require the bonds to be listed before they can invest in them.
"Demand has been a lot stronger than we expected," he said. "As soon as we started putting the bond together, we were approached by several institutional players, including hedge funds in the UK and institutional funds. But their minimum ticket (investment) size might be €50m. Our target market has been smaller, private investors."
He said there has also been interest from the Middle East and he expects the €50m of initial bonds to have been sold within 12 weeks. He said between €100m and €150m could be raised within 12 months, and that an equity listing, selling a small amount of shares, could also take place later this year.
"VAM will operate as an open-source, universal funding solution for developing partners who are qualified and capable to execute on-site efficiently but may find themselves held back by the inefficiencies and the often dysfunctional nature of the development finance options currently available in the marketplace," the company tells investors in its prospectus.
Mr Mulligan, who once worked with Morgan Stanley, said finance is currently only available to developers at rates as high as 20pc. VAM will lend to special purpose vehicles at a 9pc interest rate.
The company is in talks with a number of developers regarding projects around Dublin.
"We will engage with multiple developers," said Mr Mulligan. "There's a real lack of funding for mid-sized developers and they're struggling to get funding for multiple sites. They might have one site being developed, but banks won't stretch to funding a second site until the first is complete."
Initial projects VAM will look at financing will be valued at between €5m and €30m.
Mr Mulligan said an equity listing could see VAM's shares quoted in Copenhagen, with a possible dual listing on the Nasdaq in Dubai. A listing in Ireland might also be an option, he said.